What is the watchdog proposing?

Under its proposals, banks would set a single rate for going into the red and customers would be able to compare banks for the best deal.

The City watchdog has also proposed a ban on any fixed fees linked to an overdraft.

"The FCA isn't tinkering around the edges, it wants to radically change the UK overdraft market to make it simpler, fairer and easier for consumers to manage and compare," said analyst Andrew Hagger of Moneycomms.